Hard-pressed Turkey asks for extension of short-term credit

Published December 11th, 2000 - 02:00 GMT

Turkey is to ask western creditors to renew its short-term credit lines to cope with a liquidity crisis due to weaknesses in its banking sector, according to a report here on Sunday, December 10. 

 

The Monday edition of the newspaper Handelsblatt said the governor of the Turkish central bank, Gazi Ercel, was scheduled to meet a consortium of creditor banks in Frankfurt on Monday  

Extracts from the newspaper report were made available in advance. 

 

The consortium is headed by Germany's third largest bank, the Dresdner. 

The meeting was also to be attended by Stanley Fisher, Vice-President of the International Monetary Fund (IMF), who would present details of a $10 billion rescue package being provided to Turkey by the IMF, the report said. 

 

In return for this, Turkey has agreed to speed reforms especially in the overcrowded bank sector. 

Ankara has also agreed to speed up privatization, a long-delayed condition of a $4 billion, three-year stand-by program already agreed with the the IMF to fund its budget deficit. 

 

Turkish Prime Minister Bulent Ecevit last week announced the IMF deal, which included $7.5 billion in emergency funds and $2.9 under an existing stand-by deal with the IMF. 

 

Turkey is in desperate need of the IMF funds to fix its banks and compensate its foreign currency reserves, heavily depleted after the central bank injected money into the financial system to meet heavy cash demands. 

 

The central bank said last Thursday its hard currency reserves stood at $18.9 billion on December 1, compared to $21.5 billion on November 24 and $24.4 billion on November 17. 

 

The difference amounted to a loss of $5.5 billion in two weeks.— (AFP)  

 

© Agence France Presse 2000  

© 2000 Mena Report (www.menareport.com)

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